The re-emergence of Covid-19 in the community has cast more doubt on an already challenged earnings outlook for many of New Zealand's listed companies.
As the reporting season gets under way, the outbreak in South Auckland and the level 3 lockdown has made it even more difficult for those reporting their latest results to provide any guidance as to what may lie ahead.
"The crux of it is that it's going to be a messy period in terms of what is going on currently," Forsyth Barr analyst Chelsea Leadbetter said.
"It will take longer to get any insight into those stocks that are directly affected by Covid-19.
"A week or so ago we might have had a bit to go on, but the situation is pretty fluid at the moment."
Forsyth Barr said corporate earnings were already at their lowest level since 2008.
"For companies significantly impacted by Covid-19, balance sheets will be as, if not more, important than earnings results," it said.
Many companies have undertaken equity raises, some may still need to recapitalise.
"Net asset value (NAV) or net tangible assets (NTA) provide key valuation benchmarks for capital intense businesses, particularly during a period of elevated uncertainty over the outlook," Forsyth Barr said.
About 40 companies are due to report.
Forsyth Barr analysts are forecasting revenue to fall by 6.1 per cent at an aggregated level with ebitda forecast to drop by 9.4 per cent.
Normalised earnings per share are forecast to be down 29.9 per cent.
Dividends per share growth are estimated to be down 33 per cent.
Of the 40 companies reporting, only 13 are forecast to have positive earnings per share growth for the six-month period to June 30, versus the prior corresponding six-month period, Forsyth Barr said.
FPH goes virtual
Fisher & Paykel Healthcare was to have held a "physical" annual meeting next Friday but in light of recent Covid-19 events, the company has decided to go virtual.
Following the move to Covid alert level 3 in Auckland, the company advised that it is designated an "essential service" and continues to make and supply respiratory products from its Auckland facilities.
F&P Healthcare - easily the local market's biggest company by market capitalisation - said it had continued to operate effectively during March and April this year under the more restrictive level four rules.
The company's AGM will be keenly anticipated, particularly as it is expected to provide earnings guidance.
"With the global Covid-19 situation, they are clearly a beneficiary," Forsyth Barr's Leadbetter said.
"Their products are absolutely critical to those people who have been hospitalised.
"Clearly, things will be going pretty well for them."
F&P Healthcare shares last traded at $34.58, having gained 114.3 per cent over the last 12 months.
The company's market capitalisation stands at $19.9 billion.
A2 Milk up next
A2 Milk, the second biggest company by market capitalisation, is due to report its earnings on Wednesday.
Jarden expects a2 Milk to report a result at the top end of guidance or above for both revenue and margins.
Within the result, the key points of interest will be a combination of momentum in China, the outlook for marketing spend, consumption by older infants and progress in the US, where the company has made a big marketing push.
Interest will also centre on plans to start infant formula manufacture in own right. As it stands, a2 Milk's formula is made for it exclusively by Synlait Milk.
NZX on a roll
Covid-19 is not all bad news if NZX's first-half result is anything to go by.
NZX said its net profit shot up by 40.9 per cent to $9.1m in the six months, reflecting a significant increase in demand for capital and a huge lift in share trading during the Covid-19 lockdown.
Secondary market trading by retail investors totalled around $2.1 billion for March and April 2020, up 135 per cent on the same period in 2019.
The number of trades climbed 361 per cent and was up 1264 per cent over the past five years, assisting the growth of market liquidity.
Clear as mud
Contact Energy investors have been left guessing over the sustainability of its dividend after the company gave no guidance for the 2021 financial year at this week's annual result.
The power company declared an 11 per cent decline in earnings before interest, tax, depreciation, amortisation and financial instruments, to $451m, slightly down on the market consensus which was for $459m.
Contact will pay a 39 cents per share dividend for the 2020 financial year but it is caught in an uncertain position for the future amid the ongoing uncertainty around New Zealand Aluminium Smelters pulling out of Tiwai Point.
Forsyth Barr analysts Andrew Harvey-Green and Scott Anderson are picking Contact's 2021 full-year dividend per share to be lower than for 2020.
"We have left our dividend forecast unchanged at 32cps, which we view as sustainable through trough FY22 earnings."
But other investors appear to be more downbeat, with the analysts noting that the price was only pricing in a dividend of 26cps.
Harvey-Green and Anderson lifted their target price 50c to $8 per share after the result, based on an improved medium term outlook and a lower cost of capital.
That is well above its current trading price which closed on $6.17 on Wednesday.
Jarden analysts are picking an 2021 full-year dividend per share payout of 30cps and have a target price of $8.01.
Jarden's Grant Swanepoel and Nevill Gluyas say if Tiwai were to close in 2023 there is potential for Contact to continue to pay 39cps but a hard exit - a closure in August 2021 - would signal 30cps.
But they remain of the view that there is only a 20 per cent chance that Tiwai delays its August 2021 exit.